The Draft Copyright Tribunal Rules – Not There Yet

Background to the Copyright Tribunal

The Copyright Tribunal (the
"Tribunal") is an independent
quasi-judicial body that was established on 1 December 1997 under
section 169 of the Copyright Ordinance (Cap. 528) (the
"CO").

The main function of the Tribunal is to decide disputes relating
to licences or licensing schemes offered by licensing bodies
relating to copyright works administered by them. Any suspected
unreasonable licence refusal under a licensing scheme, or suspected
unreasonable licence terms may be referred to the Tribunal. The
Tribunal can also decide on matters which do not involve collective
licensing bodies. For example, the Tribunal can give consent on
behalf of an owner of the right of reproduction concerning a
performance, or on behalf of an owner of performers' rental
right if the identity or whereabouts of such right owner cannot be
ascertained.

Decisions of the Tribunal (hearings of which are normally
conducted in public) are appealable to the Court of First Instance
on points of law. However, to date, there has not been a single
final decision issued by the Tribunal1. Limited use of
copyright tribunals is not particular to Hong Kong however. For
example, before legislative amendments2 were made in
2009 to increase its efficiency and effectiveness, the Singapore
Copyright Tribunal heard only three cases from its inception in
1987. This figure can be compared to that of the UK Copyright
Tribunal (following the implementation of the Copyright Tribunal
Rules 2010 No. 791 of the UK Copyright Tribunal (the
"UK Copyright Tribunal Rules")) which,
in 2013-2014 alone rendered four final decisions.

It is little wonder, therefore, that the Hong Kong government is
following the UK example in an attempt to promote the Tribunal as
an effective dispute resolution forum by attempting to improve
efficiency and cost-effectiveness and encouraging parties to first
turn to the Tribunal before having recourse to courts. After all,
with technological advancements allowing a substantial broadening
of access to copyright works, it would be expected that the number
of related disputes would increase dramatically year on year. The
fact that this has not happened suggests that there is either
little awareness of the Tribunal itself, little understanding of
its role as an effective dispute resolution forum or, most likely,
its current procedures are over complicated and render it
inaccessible, especially for small businesses and individuals.

The Rules

The rules regulating the procedures for making references and
applications to the Tribunal are provided under the current
Copyright Tribunal Rules (Cap. 528C). In August 2009, following the
enactment of the Copyright (Amendment) Bill 2007 and the
implementation of the Civil Justice Reform in Hong Kong in April
2009, the Hong Kong Government invited views on the direction and
shape of a new set of rules (the "Draft
Rules"), in order to modernise the practice and
procedures of the Tribunal. Having taken into account the views
submitted as well as the latest local and overseas dispute
resolution practices and developments, for example the UK Copyright
Tribunal Rules 2010 and the enactment of the new Arbitration
Ordinance (Cap. 609) in Hong Kong in 2010, the Draft Rules were
published for further consultation on 9 December 2014. In a press
release by the Intellectual Property Department (the
"IPD"), it was noted that:

"The Draft Rules seek to make proceedings before the
Tribunal as flexible, convenient and cost-effective as possible in
accordance with contemporary dispute resolution practices."
3

Although this further public consultation period was scheduled
to end on 9 February 2015, it appears, at the time of writing, that
it has not yet been officially 'closed' by the IPD. As
such, final submissions have not yet been released.

Following the closure of the consultation period, the Chief
Justice will examine the submissions received and the Draft Rules,
as appropriately revised, will be tabled before the Legislative
Council.

For the purposes of consultation, the Draft Rules have been
split into seven sections for review, namely: principles of the
civil justice reform, standardised procedures and forms, active
case management, alternative dispute resolution, single member
adjudication, practice directions and self-contained rules.
Although no final submissions have been published in respect of the
latest period of consultations, submissions from the 2009
consultation are available and draft submissions have been shared
between stakeholders.

Principles of Civil Justice Reform

The Draft Rules provide that the Tribunal must seek to give
effect to the underlying objectives of Civil Justice Reform. Given
that the proceedings before the Tribunal are intended to be less
formal than court proceedings, the Draft Rules do not follow the
practice and procedure of the court entirely. The Draft Rules adopt
a few areas from the Civil Justice Reform, in particular active
case management, the use of statements of truth to verify claims
and encouraging alternative dispute resolution.

Comments in the 2009 submissions of stakeholders suggested that
the proposed imposition of costs sanctions, in relation in
particular to defective documentation, could discourage the use of
the Tribunal. The Draft Rules provide the Tribunal with the ability
to issue directions to rectify defective documents. Other
suggestions made in 2009 included not imposing cost sanctions
against unrepresented parties. This suggestion does not appear to
have been taken on board and instead 'special
circumstances' are set out under which costs sanctions may be
ordered in relation to deliberate misuse of the Tribunal or
misconduct in the proceedings.

Standardised Procedures and Forms

Standardised procedures and forms for all types of applications
and references under the Draft Rules are intended to streamline
procedure, thereby making the Tribunal more accessible for users.
This appears to discount the 2009 concerns raised by some
stakeholders that the use of one application form may, in fact,
cause more complexity and confusion, given the range of different
matters before the Tribunal. The majority of stakeholders supported
the notion of a standardised procedure, which should have the
effect of being more user-friendly, and can be likened to the use
of a standardised application form and the approach adopted in the
UK Copyright Tribunal Rules.

However, it is arguable that the forms featured in the Schedules
of the Draft Rules are still too complicated. For example, one
draft stakeholder submission suggests that the forms use confusing
terminology (especially for unrepresented parties), for example
"originator", rather than "applicant" and
requiring the said "originator" to select whether the
application is "inter partes" or "ex
parte".

Further, there is no specific provision for a fast track system
for simple cases of low financial value, in order to improve
accessibility (unlike in the UK).

Active Case Management

Under the Draft Rules, the Tribunal is given the power to make
orders or directions as to the conduct of proceedings. This power
can be exercised at any stage of the proceedings, whether on the
Tribunal's own initiative or at the request of one of the
parties. No general guidance is provided in relation to case
management, though once the rules are adopted it is to be expected
that guidance will later follow. Practice directions, for example,
(as discussed further below) may help reduce costs and delays. This
would, arguably, alleviate the general concern put forward by the
Law Society of Hong Kong in its 2009 submission that there is a
risk that the Tribunal could, in fact, add to the up-front costs
for parties to disputes.

Alternative Dispute Resolution

Alternative dispute resolution appears to be encouraged and
facilitated by the Draft Rules, with no threat of a cost sanction
should the parties fail to mediate. It is suggested that the
Tribunal should have flexibility to make "considering
settlement and/or mediation" a procedural step.

Single Member Adjudication

Under section 172(1A) of the CO, in order to increase
flexibility and efficiency in the disposal of certain proceedings,
all interlocutory applications may generally be heard by a single
member of the Tribunal. This dispenses with the need to engage a
fully constituted Tribunal (at least three members4),
thereby capturing the spirit of Civil Justice Reform.

Previous views submitted by stakeholders have been taken into
account in the latest version of the Draft Rules, with the
requirement that the single member of the Tribunal must be legally
qualified (in fact, the Draft Rules state that the single member
must be qualified for appointment as a District Judge under section
5 of the District Court Ordinance (Cap. 336)). However, at this
point, there is still no requirement in the Draft Rules that key
members of the Tribunal should be experienced in copyright matters.
This is likely to be requested in the latest stakeholder
submissions, given the complex nature of copyright licensing
arrangements.

Practice Directions

The Draft Rules provide that the Tribunal may issue
non-mandatory administrative guidelines setting out practice and
procedure, to complement the Draft Rules. The original consultation
unveiled stark differences in opinion as to these guidelines, with
some practitioners favouring a comprehensive set of rules, so as to
avoid the need for additional practice directions, whereas some
felt that instead reference could simply be made to existing court
procedure. Others favoured a flexible approach.

It seems that, given the legislative intent is to provide
efficiency, flexibility and to avoid excessive cost, whilst having
regard to the Civil Justice Reform, the Tribunal should not be
obliged to follow existing court procedure. However, a set a
guidelines would facilitate accessibility and would be a helpful
supplement to the current Draft Rules.

Self-Contained Rules

The Draft Rules will no longer feature cross-references to the
Arbitration Ordinance. As currently drafted, users are required to
refer to a separate piece of legislation (which, it should
considered, is likely to be subject to amendments from
time-to-time).Given that this has the potential to cause confusion,
a self-contained approach for the Draft Rules seems sensible,
especially in view of the objective to ensure the Draft Rules are
user-friendly and aid efficiency. Further, doing away with
cross-referencing allows the Tribunal to take a less formal
approach than the Court, thereby increasing accessibility and
flexibility.

Conclusion

Although the submissions to the latest period of consultation
are yet to be published, when considering the Draft Rules in light
of the original 2009 submissions, it seems likely that there is
still a bit more fine-tuning required.

The 2009 submissions highlighted the importance in monitoring
the UK experience closely. Given the encouraging level of uptake of
the UK Copyright Tribunal as a forum for dispute resolution, in the
years following the implementation of the UK Copyright Tribunal
Rules it is hoped that the changes, proposed in the Draft Rules
should, therefore, have a similar effect in Hong Kong.

Burberry v Polo Santa: A Recent Case on the Standard
of Use Required to Resist Non-Use Revocation

The recent case Burberry Limited and Burberry Asia Limited v
Polo Santa Roberta Holding HongKong Limited (HCMP 965/2014) is
a salutary reminder of the genuine and actual use required of a
registered mark to keep it safe from non-use revocation. In these
proceedings before the Court of First Instance, the trade mark
owner was unable to show any genuine use of a trade mark after its
registration, so the court revoked the trade mark on the third
anniversary of its actual date of registration.

Background

Burberry has its famous check pattern registered as a trade mark
in Hong Kong in various classes, including class 18 for leather
goods (the "Burberry Check"). The
Defendant ("Polo Santa") also owned a
Hong Kong trade mark consisting of a check pattern (the
"Polo Check Mark"). Burberry sought to
revoke the Polo Check Mark.

Polo Santa acquired the Polo Check Mark in January 2012, by
assignment (the "Assignment") from its
affiliate Polo Santa Roberta Limited ("PSR
Ltd"). Prior to the Assignment, Burberry had
instigated proceedings against PSR Ltd in the High Court (HCA
1617/2010), for selling products that infringed the Burberry Check.
Burberry obtained summary judgment in that action on 17 January
2012. The Assignment occurred on 2 January 2012, just a few weeks
before the summary judgment.

On 16 April 2014, Burberry applied by originating summons to the
Court of First Instance for an order that the Polo Check Mark be
revoked for 3 years of non-use, or alternatively for a declaration
of invalidity of the trade mark registration.

Under the Hong Kong Trade Marks Ordinance (Cap. 559) (the
"TMO"), if it is established that there
has been no genuine use of a registered trade mark in relation to
the goods or services for which it was registered for a continuous
period of at least 3 years, then the Registrar of Trade Marks or
the court can make an order to revoke that mark (TMO s. 52(2)(a)).
The 3 year period may begin any time from the date on which the
trade mark in question was granted registration (TMO s. 52(8)).

In non-use revocation proceedings, the owner of the mark in
question bears the burden of proving that the mark has been
genuinely used by the owner or with his consent in the Hong Kong
market during the relevant period.

In this case, Polo Santa was unable to satisfy the court that it
had made any genuine use of the Polo Check Mark after its
registration. The CFI held that the evidence of use produced by
Polo Santa was insufficient to discharge their burden of proof. The
CFI therefore concluded that the registration of the Polo Check
Mark was to be revoked.

What was not satisfactory about polo santa 's evidence of
use

The court was not satisfied with the evidence of use submitted
by Polo Santa. In defending the proceedings, Polo Santa relied on
two main pieces of evidence:

Licenses: It had licensed two other entities to use
the Polo Check Mark. One entity was another Hong Kong company run
by Polo Santa's director ("Far
East"). The other was a PRC company which sold
handbags in Mainland China. Polo Santa asserted that these entities
had been using the Polo Check Mark with its consent.

Catalogue: Its licensees had sold large quantities of
bags bearing the Polo Check mark. Polo Santa exhibited a 4 page
handbag catalogue as evidence. The handbags shown in the catalogue
had a small metallic badge bearing the Polo Check Mark. Polo Santa
attempted to rely on the EU Court of Justice case Engelhorn
KGaA v Office for Harmonisation in the Internal Market (Trade Marks
and Designs) T-30/09, 8/7/2010, in which a catalogue was found
to be appropriate evidence of genuine commercial activity involving
the goods in question.

The court made the following rulings:-

Licenses

Polo Santa did not dispute that to resist revocation on the
ground of non-use, the genuine use must have occurred in Hong Kong.
The court concluded that their license to the PRC company for use
of the mark in Mainland China was irrelevant.

Catalogue

Whilst the judge opined that catalogues are generally accepted
as useful evidence of genuine commercial activity, the catalogue
provided by Polo Santa was not enough to prove genuine use. The
judgment clearly describes the differences between the
Engelhorn catalogue and the Polo Santa catalogue. The
Engelhorn catalogue contained specific information of a
large number of shops offering the goods, including telephone
numbers, fax numbers, postal addresses and internet addresses. This
information would enable end customers to make purchases. In
perceiving the Polo Santa catalogue, the judge stated that,
"The catalogue is surprisingly sparse in content. The
words "Polo Santa Barbara" appear but it contains no
name, address, telephone number, email address or any other contact
details of the defendant or any other identity". In other
words, there was nothing in the Polo Santa catalogue suggesting
that the goods were being offered to end customers for sale.

It is notable that the judge specifically pointed out that there
was no contact information for the defendant in the Polo Santa
catalogue. When assessing whether a catalogue or brochure can
constitute satisfactory evidence of use in non-use revocation
proceedings, the court will be actively looking for signs that link
the evidence presented to the party relying on it. The
defendant's contact information may constitute evidence that
the goods are truly intended to be offered for sale to consumers by
them.

The absence of documents

The judge also noted Polo Santa's failure to provide certain
types of supporting evidence and took the view that the absence of
these documents was "highly significant". Polo Santa had
never submitted any:

Statements from shop assistants saying that the products had
been offered for sale under the Polo Santa mark.

The judge concluded that given the scale and regularity of the
sale of products that Polo Santa alleged, it was remarkable that
the catalogue was the only evidence that Polo Santa was able to
produce.

Trade mark owners can't get away with token use

This case sheds light on the kind of evidence of use the court
will be expecting in non-use revocation cases, and in doing so,
clarifies the standard of use required of a registered trade mark.
The judgment helpfully lists out certain types of documents that
would assist a trade mark owner in resisting non-use revocation
proceedings, e.g., documents evidencing manufacture and sale,
internal records, catalogues containing the defendant's contact
information, and statements from employees stating that products
had been offered for sale under the mark. Brand owners are
therefore well reminded to make and preserve these documents and
records, in order to safeguard their marks from non-use
revocation.

On January 27, 2015 the State Intellectual Property Office
("SIPO") released a Draft on Patent Administrative
Enforcement Rules (the "Draft") for public comment. The
Draft aims to improve the current patent administrative enforcement
rules which took effect on February 1, 2011 by adopting several new
measures, including enhancement of patent enforcement in the
e-commerce context and acceleration of patent administrative
proceedings. Due to the nature of administrative patent enforcement
both in theory and practice, these proposed improvements will
affect a small number of foreign patentees at most.

1. The Limitations of Administrative Patent Enforcement in
China

China is one of the few jurisdictions where a patentee is
offered the option to assert a patent infringement claim through an
administrative action as a quicker and more cost-effective
alternative to court proceedings. Administrative agencies, however,
are authorized to grant only injunctive relief (not monetary
damages) and may refuse to accept cases on discretionary grounds
such as complexity. Since most of the foreign patentees own
high-stake complex invention patents, they may not adequately
benefit from this remedy. Not surprisingly, among the 24,000
administrative patent cases filed in 2014, only 15% involved
invention patents and only 6% were brought by foreign patent
owners. Whether the improvements in the Draft are significant
enough to lure more foreign patentees to seek administrative
enforcement while foregoing monetary damages remains to be
seen.

2. Enhanced Administrative Patent Enforcement in E-Commerce:
A Paradise in Theory or Reality?

Several provisions of the Draft now offer an improved legal
framework to stop patent counterfeits in e-commerce platforms.
Specifically, an administrative authority may order e-commerce
website owners to delete cookies, remove links or block webpages
containing patent counterfeit products. As part of an effort to
increase transparency, administrative authorities are further
required to publish their decisions online. Since online shopping
has been gaining increased popularity in China—one of the
world's largest consumer economies— this improvement, at
least in theory, will offer speedy relief to foreign patentees who
own simple utility and design patents that are vulnerable to
infringement online.

Some commentators, however, argue that the lack of specificity
of the Draft concerning e-commerce enforcement may ultimately
hinder its implementation, particularly since there is
inconsistency in the application of the procedure and the quality
of decisions from city to city. How each local agency will respond
to this improvement remains to be observed. Generally speaking,
administrative enforcement agencies in first-tier cities such as
Shanghai, Beijing, and Guangzhou have a reputation for being more
effective and professional than those in small cities. Nonetheless,
foreign patentees should consider adopting a program to
systematically monitor the major e-commerce websites in China for
potential infringing activities, while simultaneously building
relationships with local legal counsel who are experienced in
administrative patent enforcement.

3. Quicker Administrative Proceedings Demand Better
Preparations

The Draft shortens the duration of administrative patent
proceedings from the current four month limit to three months (for
invention and utility patent proceedings) and two months (for
design patent proceedings) with the possibility of a one month
extension upon approval of the department chief. The Draft also
shortens the deadline for a party to submit a defense statement and
statement of opinion, and the deadline for the administrative
agency to enter the case on file after receiving a complaint from
15 days to 10 days.

Notably, local administrative agencies rarely follow the
timelines set forth by the SIPO, and many agencies in local
provinces operate under their own timelines. Even if the revised
twoand three-month timelines were to be strictly enforced, foreign
patentees would face new challenges brought by the shorter
deadlines in an inconvenient forum. Thus foreign patentees should
be thoroughly prepared by gathering as much evidence as possible
before officially initiating an administrative action.

Conclusion

Foreign patentees which may be aware of online distribution
channels of infringing products should reassess the relevance and
utility of administrative patent enforcement in light of the Draft,
consider adopting a monitoring program that targets major
e-commerce websites, and be well-prepared before filing a
complaint, preferably before an administrative agency in one of the
first-tier cities.

Footnotes

1 There are 11 applications officially "under
progress", for example application No. 1/2010 for a grant of
licence under section 163

CO (i.e., reference to the Tribunal in relation to an
expiring licence) and application No. 1/2011 for a grant of licence
under section 156(3) CO (i.e., reference to the Tribunal in
relation to a licensing scheme), the most recent application to the
Copyright Tribunal, however there are currently no scheduled
hearings. Of these 11 applications 7 have in fact been withdrawn or
discontinued. In relation to the remaining 4 applications,
Interlocutory application hearings have taken place and interim
relief was ordered by the Tribunal (the latest being on 30 August
2013 in relation to an application for the grant of a licence under
section 155(3) CO and/or section 156(3) CO (i.e., reference to the
Tribunal in relation to a proposed or existing licensing
scheme)).

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This article provides information and comments on legal
issues and developments of interest. The foregoing is not a
comprehensive treatment of the subject matter covered and is not
intended to provide legal advice. Readers should seek specific
legal advice before taking any action with respect to the matters
discussed herein. Please also read the JSM legal publications
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the privacy policy under which the information was collected.

How to contact Mondaq

If for some reason you believe Mondaq Ltd. has not adhered to these
principles, please notify us by e-mail at problems@mondaq.com and we will use
commercially reasonable efforts to determine and correct the problem promptly.

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